Eurasian Review of Business and Finance, 2019, Volume 3, Issue 2, 1-9.

Methodology Used in Analysing Absorption Capacity of EU Funds in Albania

Jola Himci KEPI

Tirana University, Faculty of Economics, Department of Marketing, Tirana, Albania. E-mail:  


Uncontrolled credit rises have the capacity to cause serious banking crises. Global banking crises have led to discussions on credit-to-GDP gaps and new credit modelling structures. In this study, both developed and emerging economies are analyzed regarding increased credit, non-performing loans, and credit-to-GDP gaps. Panel logit models are used, as well as z-score and capital adequacy variables. The results indicate that increasing bank credit is an integral factor in banking crises. Furthermore, increases of non-performing loans also pose major systemic risks. The financial strength of banks is essential to preventing financial crises. This is not valid for capital adequacy regulations. Instead of minimizing banking system risk, on the contrary, high and firm capital adequacy ratio regulations cause a system to be more fragile.

JEL Classification: G01; G21; C23.

Keywords: Absorption capacity; EU Funds; Methodology.

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